Some housing bubble news from Wall Street and Washington. Inman News, "Reports from the nation's 12 Federal Reserve banks show continuing weakness in residential real estate and construction, with most districts characterizing housing markets as soft or weak, and no districts reporting an increase in new home construction."

From Bloomberg. "Consumer advocates Thursday called on the Federal Reserve to write stricter rules to end abusive lending practices, saying the central bank had not acted forcefully enough to prevent delinquencies and foreclosures."

"State officials and consumer advocates recommended that the Fed write rules that would require lenders to ensure a borrower's ability to repay. 'Common sense tells us that if you take out a loan, you should have the ability to pay,' Iowa Atty. Gen. Tom Miller said."

"The lenders, including JPMorgan Chase & Co. and Option One Mortgage Corp., urged the Fed to require simpler consumer disclosures and to issue guidelines instead of rules. 'We recommend that the board be cautious,' said Faith Schwartz, senior VP at Irvine-based Option One, a unit of H&R Block Inc."

The New York Times. "In opening remarks, Randall S. Kroszner, a governor on the Fed’s board, said the central bank shared responsibility over mortgage lending with other state and federal regulators."

"'Rising foreclosures in the subprime market over the past year have led the board to consider whether and how it should use its rulemaking authority to address these concerns,' Mr. Kroszner said. 'In doing so, however, we must walk a fine line.'"

"In the morning, representatives from mortgage companies and an association of mortgage brokers parried, mostly in good humor. The opposing sides appeared to agree that the mortgage industry got carried away in the recent housing boom but disagreed sharply on the scope of the problem and what should be done."

"'There are folks that do this business the right way,' said Pablo Sanchez, a national mortgage production specialist with JPMorgan. 'I would hate to have this as the last record that this is all the lenders’ fault.'"

From Marketplace. "With the hope that subprime problems eventually will be worked through and won't infect the overall mortgage market, Mortgage Bankers Association's chief economist Doug Duncan said: 'We're just urging people to take a deep breath and look at the big picture.'"

The Miami Herald. "Miami's Intercredit Bank has signed an agreement with federal bank regulators to take steps to tighten its lending practices and reduce credit risks."

"In March, Ocean Bank was hit with a cease and desist order from the Federal Deposit Insurance Corp. Miami banking analyst Kenneth Thomas said that two actions on lending practices coming so close in time was an unusual but stemmed from the weakening real estate market and the rise in mortgage problems."

"'This is the second major one that emphasizes lending and not just compliance with the Bank Secrecy Act or other anti-money laundering issues,' Thomas said."

"Economists said homeowners trying to refinance their adjustable-rate mortgages before they reset to higher levels are already feeling pinched. The national average for the 30-year fixed-rate mortgage jumped to 6.74 percent Thursday. At the beginning of the year, the average was 6.18 percent, according to Freddie Mac, a big buyer of mortgages."

"Last year, adjustable-rate loans accounted for 25 percent of mortgage applications, up from 11 percent in 1998, Freddie Mac said. Demand for adjustable-rate loans peaked in 2004 at 33 percent; many of those are at or near the reset point."

"'It's going to be tough,' said Adam L. Stein, president of the Washington Association of Mortgage Brokers near Seattle. 'I talk to people every day looking to get the fixed rate. You give them the current rate and they say, 'That doesn't do anything for me.'"

From MarketWatch. "The mortgage bankers came out with their latest survey on mortgage delinquencies and foreclosures on Thursday, showing a small rise in the percentage of homeowners who are in the process of losing their homes because they aren't paying the mortgage."

"Foreclosure rates for adjustable-rate mortgages, or ARMs, have doubled over the past two years. This is not just the subprime borrowers, those with less than stellar credit. Even prime borrowers who opted for ARMs are in trouble."

"The foreclosure rate for subprime ARMs has gone from 5.1% to 10.1% in less than two years. The delinquency rate has soared from 10% to 15.75%. For prime ARM borrowers, the foreclosure rate has doubled from 0.8% to 1.6% in just one year. The delinquency rate for prime ARMs jumped from 1.5% a year ago to 2.4% this year."

"Bill Gross, manager of the world's largest bond fund, says U.S. housing is in such a perilous shape that the Federal Reserve may need to cut interest rates in six to nine months."

"Not so, says Alan Greenspan, the Fed Chairman who presided over 14 straight rate increases before retiring in January 2006. The odds are 2-to-1 that the economy will avoid a downturn, he said last month. He said in a speech in Mexico City two days ago that long-term interest rates are still low and may not last."

"What Gross and Greenspan differ most on is the direction of the real estate market. 'They can't both be right,' said Brian Hilliard, chief economist at Societe Generale in London."

"For more than two years Gross has been wrong on the direction of borrowing costs. 'We have made a mistake over the past 12 months expecting the Fed, first of all, to stop before 5.25 percent and, second of all, to maybe start to ease a little before where the market expects it to ease,' Gross said May 17. 'If there's been a mistake, that's it.'"

"A measure of U.S. consumer prices rose less than forecast in May, evidence that ebbing inflationary pressures may allow the Federal Reserve to keep interest rates unchanged this year."

From CNN Money. "This month's rise in global interest rates is probably a sign of the beginning of the end of an era of supercheap money - a change with profound implications."

"'This is the end of the cheap money cycle,' Marc Pado, U.S. market strategist at Cantor Fitzgerald in New York, said."

"'The warning shots fired by the market will perhaps make investors stop and think about whether they can continue to pile into asset classes without abandon and not have to pay the price at some time,' said Peter Dixon, strategist at Commerzbank in London."

"Rising rates could hurt economic growth, especially in the United States, where rising mortgage rates could threaten the already fragile housing sector by increasing the burden on home buyers."

"The housing sector already faces pressure from an oversupply of homes on the market and falling home values in some markets. The sector also faces risks from ongoing problems in so-called subprime loans to borrowers with weak credit. Weakness in the housing sector has worried economists, and the market still may worsen."

"According to a report from the financial service companies, National City Corp and Global Insight, the number of single-family homes they judged overvalued in the United States fell from 17 percent in the last quarter of 2006 to 14 percent in the quarter ended March 31."

"The latest price declines were mostly clustered in areas that had seen big price run-ups during the boom, with California, Florida, New York and Massachusetts taking hits."

"James Diffley, managing director of Global Insight's Regional Services Group, said in a statement, 'The price declines we are seeing today in California, Florida, and New England were predicted two years ago when we identified them as the most extremely overvalued markets in the nation.'"

"The metro areas facing the greatest threat of future price drops are in California, according to Diffley."

"He blamed it on a, 'huge glut of new and existing homes for sale on the market, and the tightening of credit standards in light of the subprime mortgage troubles [that] will continue to exert downward pressure on prices for some time.'"

From Reuters. "There is no good news for some the largest home building companies in the United States. 'We do think if you're dumb enough to buy a home builder (share), you ought to buy us,' Ryland Group Inc. CEO R. Chad Dreier, told an investor audience at the JP Morgan Basics and Industrials Conference this week."

"Against a backdrop of plunging sales and rising contract cancellations, there was little talk of a turnaround or a bottoming out of the housing market."

"Most U.S. home builders have taken defensive positions looking to generate cash. They have also been selling unsold homes, land positions, paring debt, laying off employees and cutting prices to generate sales."

"'Our goal is close as many homes as we can in this fiscal year,' said Don Tomnitz, CEO of D.R. Horton Inc., the largest U.S. home builder. He tells his sales force that 'If the buyer's got a pulse, and they're warm, take them out of the market place' by getting them to sign a contract."